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The key to this masterful tale of good intentions gone wrong comes early, when Jeffrey Sachs tells the author that "we have enough on the planet to make sure, easily, that people aren't dying of their poverty" (italics mine). The E-word occurs again during a speech Sachs delivered in 2007: "There's absolutely nothing wrong with African agriculture that can't be quickly improved...you can improve yields by a factor of two or three...from one growing season to the next...Easy!"

In one of the most readable and evocative accounts of foreign aid ever written, The Idealist shows that virtually nothing about such aid is ever easy. In 2006, when Columbia University economics professor Jeffrey Sachs, author of the influential best seller The End of Poverty, launched the Millennium Villages Project, journalist Nina Munk decided to devote her time to covering that project close-up. Sachs selected a dozen of what he called Millennium Villages in 10 African countries. The idea was to eliminate poverty in those villages with packages of technical fixes ranging from fertilizer to mosquito nets to health centers to diesel generators to new wells -- what Munk calls "extreme village makeover." For his initial stake, Sachs raised more than $100 million, of which $50 million came from billionaire philanthropist George Soros.

As the success in each village demonstrated how to solve poverty, Sachs would then get more backing to expand the project Africa-wide. The book tells what happened next -- of the project's journey from "easy" to unexpected woes. I am in the embarrassingly self-serving position of being a vocal critic of Sachs' ideas and reviewing a book that provides a lot of support for my criticisms. Be on the alert for bias.

The Idealist: Jeffrey Sachs and the Quest to End Poverty

by Nina Munk Random House 272 pages, $26.95

Munk chose two villages for intensive coverage: Dertu in the arid north of Kenya, and the better-watered and more fertile village of Ruhiira, Uganda. With novelistic skill, she also tells the villagers' story from the point of view of the local man in charge of Sachs' project in each village; the Kenyan Ahmed Mohamed and the Ugandan David Siriri both come alive on the page.

In Ruhiira, the project induced villagers to shift from a staple of green bananas (matoke) to maize. Agricultural yields did increase, but only to generate a maize surplus for which the villagers could not find a market or even enough storage facilities -- a problem they had not had with matoke. Siriri told Munk he regretted recommending maize seeds and fertilizer. In Dertu, both pumps at the borehole for water broke down. Mohamed reported to headquarters, "The local community are in critical/emergency water crisis...lives are in danger." But cost overruns in other areas of the Dertu budget left no money for new pumps.

As the first demonstration phase of the project ended in 2011, Sachs launched phase two at United Nations headquarters in New York. But the funding was not enough to add other villages, perhaps not even to maintain the same scale in the existing villages. Uganda's ruler, Yoweri Museveni, was not terribly committed to the project, either. Munk records a priceless conversation between an enthusiastic Sachs and a bored Museveni, who later decided to spend scarce government funds on six new fighter jets. Sachs' original crusade -- to demonstrate success in the Millennium Villages and then scale it up -- had not worked out as planned.

I am quoted at one point in The Idealist as remarking that "Sachs is essentially trying to create an island of success in a sea of failure, and maybe he's done that, but it doesn't address the sea of failure." But Munk even raises doubts about "the island of success." She does note quantitative indicators of success in the villages, such as falling prevalence of malaria, falling child mortality, rising nutrition. Yet she also cites critics who complained that Sachs had made rigorous evaluation impossible in his design of the project; there were no benchmark villages without the project to use as comparison to the project villages. Falling mortality and rising nutrition was happening throughout Africa, which made it difficult to attribute these improvements in the Millennium Villages to the project.

As the author makes clear, no one has worked harder to help the world's poor than Jeffrey Sachs, or made more of the world's affluent care about their plight. Moreover, aid has had some focused successes, such as vaccination programs. But aid cannot achieve the end of poverty. Only homegrown development based on the dynamism of individuals in free societies can do that, just as it did for the lucky people of the world whose forbears climbed out of poverty.

Sachs offered a seductive message to Westerners: that they could be the saviors who could end poverty in Africa with a modest amount of effort. After reading Munk's superb book, nobody will ever again think ending poverty is really that easy.

WILLIAM EASTERLY is professor of economics at New York University and the author of The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good.

Reliable Wreck

Markets Versus Managers

Reviewed by Donald J. Boudreaux

"Markets, by definition, are hardly reliable," comments author Robert Kuttner in this examination of the causes and cures of the Great Recession and of Europe's fiscal woes. That is, markets are definitively synonymous with error and deceit, an essential theme of this book. It is also a credo of the American Prospect, the magazine Kuttner co-founded and currently co-edits.

Since people can be unreliable, so are the markets in which they operate. The question, however, is whether the incidence of unreliability declines -- or increases -- when people run the economy through the system of government, rather than through the profit-and-loss system of markets.

That question is barely on the author's radar screen. It is thus implicitly assumed, for example, that politicians can more reliably manage debt than can businessmen under the lash of profit and loss. It follows that we need what Kuttner calls "managed capitalism," in which both public and private debt is forgiven, thereby shielding government and business from loss. Such distorted priors lead the author to blame today's economic problems on a pair of evil "conservative" twins: an obsession with austerity and financial-market deregulation.

Especially troubling to Kuttner is the overhang of debt -- private debt in the U.S. and government debt in Europe -- that keeps American consumers and European governments from spending enough money to get their economies revving again. If only these debts were somehow lessened -- forgiven. transferred to a solvent public agency, inflated away, whatever -- then American homeowners and European governments would be free again to spend.

Debtors' Prison: The Politics of Austerity Versus Possibility

by Robert Kuttner Random House 352 pages, $26.95

On top of the problem of excessive debt are the activities of speculators and other financial wizards whose deregulated machinations not only got us into this mess, but also obstruct governments' abilities to right wronged economies.

Operators in the financial sector, Kuttner insists, fooled innocent Americans into taking out unaffordable mortgages and then fooled one another into thinking that the value of those mortgages was higher than it really was. In Europe, speculation against the value of government bonds prevents governments there from spending and inflating as freely as Keynesian-Kuttnerian economics requires.

Kuttner's proposed solution unsurprisingly involves massive debt relief, inflation (at least 4%-6% annually), and tight reregulation of financial markets. These proposals are difficult to take seriously given Kuttner's weak grasp of the nature of markets, the role of money, and the essence of politics.

Consider his criticisms of speculators. As Kuttner tells the tale, speculators in search of quick profits just happened to pick on the unlucky Greek government, driving up the interest rate that it must pay to borrow. But there would be no profit for speculators in betting against Greece's creditworthiness if that creditworthiness was not in jeopardy – and it was put in jeopardy not by speculators but by government profligacy.

All the speculators did by pricing the debt was to reveal to the world more quickly just how precarious Greece's fiscal situation was. Kuttner's response -- to rein in speculators -- is the left-wing reformer's equivalent of shooting the messenger.

He also fails to appreciate the likely role of the Fed in inflating the housing bubble, a view he shares with an unlikely ally, Fed Chairman Ben Bernanke. Since Bernanke was a Fed governor when the monetary mischief occurred, he might naturally want to absolve himself. In comical fashion, however, the Fed chairman hoisted himself with his own petard by declaring in a publicly released speech that "economists who have investigated the issue have generally found that...only a small portion of the increase in house prices earlier this decade can be attributed to the stance of U.S. monetary policy." But so difficult was it for Bernanke to find such economists, he inadvertently cited in a footnote a scholarly study that concluded just the opposite.

Similarly, Kuttner dismisses the notion that government bears any responsibility for the crisis through sins of commission -- beyond the sin of omission involving failure to regulate -- as merely a "far-fetched" excuse for "blaming the victims." Not surprisingly, then, the few pages that he devotes to addressing allegations of government responsibility are no more persuasive than Bernanke's inept attempt to absolve himself of policies he helped foster.

For Kuttner, a government inoculated against laissez-faire ideology is the great protector of the people and the trustworthy administrator of "managed capitalism" -- an inadvertent synonym for the evils of crony capitalism, in which the losses of influential companies are socialized onto the entire nation.

George Mason University economics professor DONALD J. BOUDREAUX blogs at Cafe Hayek and is the author of Half-Wits & Hypocrites: A Daily Dose of Sanity from Cafe Hayek.

Knowledge and Power

The Information Theory of Capitalism and How It Is Revolutionizing Our World, by George Gilder

Reviewed by Per Bylund

George Gilder is a vocal proponent of "supply side" economics and the best-selling author of the celebrated Wealth and Poverty and The Spirit of Enterprise, an eloquent treatise on entrepreneurship and creative destruction. In his new book, he joins the chorus of critics of economics and aims to undo the entire discipline. Such radical scrutiny is always welcome. Unfortunately, Knowledge and Power wears out that welcome quite soon.

Gilder endeavors to formulate an "information theory of capitalism," an application of information theory to economic phenomena that is meant to replace economics as a framework for understanding the market. The book's three parts present the theory, apply it to the financial crisis, and put forward policy implications.

Knowledge and Power

by George Gilder Regnery Publishing 400 pages, $27.95

The first part dismisses economics as irrelevant and then dives into discussing the "power" of information, entropy, and learning. Entrepreneurs imagine innovations and struggle with and overcome entropy. They frequently upset equilibrium when producing for profit, which reveals vital information. Capitalism, therefore, trumps other modes of production through aligning entrepreneurial knowledge with economic power.

The second part, titled "The Crisis" reformulates the events of the financial crisis in terms of information, knowledge, learning, and entropy. The reason for the crisis, Gilder suggests, was the separation of financial markets -- which operate without direct knowledge of what is traded -- from the real economy, in which such knowledge is essential.

And the third, "The Future," seems intended to show how this theory necessarily leads to a call for Reaganomics-style policy. But the chapters are arbitrarily argued and disconnected. The first three are devoted to dismissing Nassim Nicholas Taleb's The Black Swan, Benoit Mandelbrot's fractal analysis of finance, and the supposed liberalism of author David Stockman. The author then proclaims that flat taxes function as low-entropy carriers for high-entropy entrepreneurship, and suggests informational reasons for Israel's technological success. A full chapter is dedicated to dismissing the "decline of innovation" view of Tyler Cowen and Peter Thiel, who are chastised for not understanding that "information is more fundamental than matter." The last chapter sings the praises of investment, relabeled as "giving."

Parts of Knowledge and Power are well argued. Gilder's treatment of John Maynard Keynes and his disciple Paul Krugman is quite accurate, although it may seem intemperate and blunt. Considering Krugman's unsubstantiated rants on the New York Times blog, one might even say that he earned it. However, a lot of the book's arguments are strikingly hollow or simply old lore in new packaging. Dressing up economics in the language of information theory doesn't make an argument for abandoning economic theory. It only raises the question of what value the relabeling brings.

The author's supply-side economics, which entails emphasis on production rather than consumption, is presented as something very different from existing economics or "demand side" theories. But in order to accept Gilder's claim, we must forget both historical and contemporary theories.

The author struggles to show why Knowledge and Power is not simply a watered-down version of insights from the Austrian school of economics associated with Ludwig von Mises and Nobel laureate F.A. Hayek. Mises' and Hayek's disciples ironically include Gilder himself, as well as economist Thomas Sowell, whose lengthy treatise Knowledge and Decisions cites Hayek's 1945 essay "The Use of Knowledge in Society" as inspiration. Consistent with Gilder's economics, the Austrian-school economists emphasize entrepreneurship, value creation, and knowledge. Alas, Knowledge and Power ignores their contributions, while making false claims to have broken new ground.

PER BYLUND is a research professor in Baylor University's department of management and entrepreneurship.

Scarcity

Why Having Too Little Means So Much

Reviewed by Andrew Heaton

This comprehensive examination of scarcity by Harvard economist Sendhil Mullainathan and Princeton psychologist Eldar Shafir is useful reading for those strapped for cash or suffering from time-sapping conditions. That general condition applies to the authors themselves. Due to a scarcity of time or resources or both, they failed to get their manuscript in by the deadline date.

Mullainathan and Shafir have much to say about the damaged mental "bandwidth" people undergo when strapped for time and money. They make a distinction between lack of resources and the feeling of scarcity which accompanies it. "The mind," they assert, "orients automatically, powerfully, toward unfulfilled needs." When it does, the ensuing panic and concentration pare back normal cognitive faculties. Research indicates that individuals struggling to pay rent and bills lose swaths of IQ points merely to the stress of poverty. Self control becomes a casualty of scarcity, as does long-term planning.

While scarcity creates stress and the subsequent mental decline, it does afford a few positive benefits. Deadlines or pending bankruptcy can focus attention better than Aderol. But the productive windfall comes at a steep price. As scarcity streamlines thinking, it also shaves away cognitive ability. Dieters in experiments spot the word "cake" in crossword puzzles faster than their calorie-relaxed peers, but it also takes them longer to find non-delicious terms. The lonely are so ravenous for companionship that they hyper-focus during all social interaction, thereby driving themselves further into awkward solitude. Being poor, we are told, "reduces a person's cognative capacity more than going one full night without sleep. It is not that the poor have less bandwidth as individuals. Rather, it is that the experience of poverty reduces anyone's bandwidth."

Scarcity

The impoverished more closely resembles homo economus, the elusive perfectly rational human, since each dollar they spend is immediately diverted from some other need. In periods of relative affluence, however, the busy are apt to enjoy their temporary respite from deadlines, and the poor act more wantonly while temporarily flush with cash: "Your scarcity originates with mistakes made during periods of relative abundance." In other words, fear the boom more than the bust.

Over-booked people fall into chronology traps. As an approaching project begins to loom in their mind, they will put off equally important but less immediate deadlines to ensure that they can resolve the crisis of the moment. These postponed deadlines return later, magnified, perpetuating the cycle. As debts of time or money stack up, people lose their ability to plan ahead, and instead react from crisis to crisis.

The prescription for the scarcity trap: "slack." Financially, that means having enough liquid assets to absorb shocks, thereby forestalling a reliance on the vicious cycle of debt. When applied to scheduling, slack is a buffer that keeps unexpected delays from toppling a precariously stacked schedule. A fully-booked day is one traffic jam away from rendering every appointment late. Slack between events absorbs this possibility, but more importantly, allows the freedom to maintain mental bandwidth instead of collapsing into stress-induced myopia.

Is Scarcity a useful investment of readers' scarce time and money? If you have ever lost sleep by worrying about how little time you have to sleep, or sputtered off from a drive-thru without bothering to grab your purchase, Scarcity will assure you that you're not crazy. You're simply overwhelmed by mental juggling. Such an insight could save a life-time of money and time.

A frequent contributor, ANDREW HEATON is the author of From the Monkey Cage: Fixing Politics Through Wit & Cartoons. He blogs at www.mightyheaton.com.